A short update on the housing fallout.
Jul. 26th, 2007 08:08 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdThe CDO market has collapsed. Market activity is down 78% in a month. Countrywide is reporting prime - not subprime, not alt-A, prime - mortgage delinquencies have jumped 255% since last year. This matters because of the role it plays in credit in general; the cascade impacts this collapsing is having in the general credit market are finally being talked about by the general financial press, I suggest you read up on it.
While some people are talking about a recovery in housing in hopefully six months, the data and analysis that I'm seeing really implies that such a recovery is more likely at least twelve and more likely at least 18 months away, and that six months from now the housing sector will be worse, not better. In particular, this is because the jump in loans in default has been partially triggered by upward mortgage interest rate adjustments as teaser/introductory rates expire. Unfortunately, this has only started, not finished, and the number of these sorts of rate hikes per month will - this is known, not speculation - be more than double their current number in January 2008.
I hope everyone had a chance to talk to their financial advisors during their various open-enrollment periods in June and July.
[pre-posting ETA, if that makes any sense at all: I wrote most of this a few days ago and forgot to hit "post." I hate that. Anyway, I haven't been updating because I've been working my ass off; I have a bunch of stuff I have to get done at 5038 before the end of the month. I'll try to get a CWU out tonight, I've got one started.]
[ETA 2: And I'm not making any bets about the strength of any housing recovery in 18 months, either. Some of the people I read are projecting three years before the numbers make sense again - and their analysis is good. By saying "more likely at least 18 months" I'm really saying, "I'm hoping for a sharper downturn sooner to clear all this crap out," because the alternative is worse. But that gets into issues too complex for an ETA. Particularly an ETA 2. ^_^ ]
While some people are talking about a recovery in housing in hopefully six months, the data and analysis that I'm seeing really implies that such a recovery is more likely at least twelve and more likely at least 18 months away, and that six months from now the housing sector will be worse, not better. In particular, this is because the jump in loans in default has been partially triggered by upward mortgage interest rate adjustments as teaser/introductory rates expire. Unfortunately, this has only started, not finished, and the number of these sorts of rate hikes per month will - this is known, not speculation - be more than double their current number in January 2008.
I hope everyone had a chance to talk to their financial advisors during their various open-enrollment periods in June and July.
[pre-posting ETA, if that makes any sense at all: I wrote most of this a few days ago and forgot to hit "post." I hate that. Anyway, I haven't been updating because I've been working my ass off; I have a bunch of stuff I have to get done at 5038 before the end of the month. I'll try to get a CWU out tonight, I've got one started.]
[ETA 2: And I'm not making any bets about the strength of any housing recovery in 18 months, either. Some of the people I read are projecting three years before the numbers make sense again - and their analysis is good. By saying "more likely at least 18 months" I'm really saying, "I'm hoping for a sharper downturn sooner to clear all this crap out," because the alternative is worse. But that gets into issues too complex for an ETA. Particularly an ETA 2. ^_^ ]
